Group revenue for the ASX-listed company was down 1.6 per cent to AUD$338m (US$230m) in its first half of financial year 2023, which was between June and December last year.
Group gross profit decreased 2.7 per cent to AUD$180.2m (US$122.9m).
Much of the decline came from the international markets, especially Malaysia, Indonesia, and the export business, where revenue fell by 15.1 per cent to AUD$93.5m (US$63.7m).
A lower demand for immunity products as compared to the unusual spike during the peak of COVID-19 was highlighted as a reason for decline.
“Inventory built in markets to ensure product availability for anticipated COVID-19 surge demand which did not materialise in 1H FY23,” the firm said in its financial results presentation, adding that it would progressively reduce its inventory to improve sales efficiency.
In contrast, back home in Australia and New Zealand, revenue climbed 3.9 per cent to AUD$150.8m (US$102m).
Elsewhere in China, which also includes Hong Kong and Taiwan, revenue was also up 6.1 per cent to AUD$93.7m (US$68.9m)
This was backed by its strong performance in last year’s Double 11, where gross merchandise value (GMV) sales were up 19 per cent yoy. Its growth was also propped up by cross-border e-commerce and corporate daigou sales.
Despite the positive results and China loosening its COVID-19 restrictions, Blackmores remains cautious on the market outlook.
It is “still too early to tell what a post pandemic consumer environment will look like and still too early to assess the potential impact of easing of lockdown restrictions and slow build-up of Chinese travellers into FY24,” the firm explained.
In fact, it is not only China that the firm finds difficult to make future forecasts, due to continued inflationary pressures and the impact that it could have on spending.
“For the remainder of FY23, markets are expected to remain somewhat uncertain with continuing themes of cost inflation and rising interest rates impacting consumer sentiment and shopper behaviour,” said board chair Wendy Stops on behalf of the firm’s directors.
Across Australia and New Zealand – the firm’s biggest markets – average price increase of five to six per cent was introduced to mitigate cost inflation.
In China, the increase hovered at six to eight per cent higher in products sold across e-commerce.
In most of the international markets, the average price increase was seven to eight per cent.
New product development and expanding product distribution are the strategies that Blackmores has to take the business forward.
Focus would be placed on launching higher-margin products in the second half of FY23, including Vision Care Plus Energy in the international markets and driving the premiumisation of fish oil – one of its bestsellers alongside eye care products in China during Double 11 last year.
Last year, the firm launched new products such as Omega mini, Vision Care and Energy, and Superkids in China.
Expanding its presence in the independent pharmacy channel would be the firm’s plan for Indonesia, while in Malaysia, growth in modern trade is expected to be partially offset by slower growth in independent pharmacies.
In Thailand, the firm would prioritise on consolidating its market leading position.